Breaking Out of Brick & Mortar

By Abigail A. Lorden, Editor-in-Chief
| September 06, 2013

Bao isn’t a new food by any stretch. The steamed buns, filled with meat or vegetables, have been a popular staple in Asia for ages, quite possibly millennia. But for the last 10 years, a fast-casual dining concept has been bringing bao to the greater Chicago area. Wow Bao (www.wowbao.com) first entered the market with a few brick-and-mortar locations, then expanded into online ordering and bicycle delivery, then moved into local sports stadiums and grocers’ freezers. Now Bao’s buns are available through its food truck and pop-up restaurants, through nationwide shipping, and in October will be sold at Chicago’s O’Hare airport. In August Wow Bao celebrated its 10 millionth bao, all with just four physical locations, and for managing partner Geoff Alexander this is just the beginning.

Even with all of its diverse sales channels, Wow Bao still operates as a small business and Alexander is in the trenches on a daily basis. He’s known among his peers to embrace technology and contends that a willingness to do so has been a central component of Wow Bao’s growth. Alexander gives HT an inside look at how Wow Bao expanded beyond the four walls and the role that technology is playing in helping to bring bao to the people.

HT: First, full disclosure, Wow Bao is under the umbrella of Lettuce Entertain You, Enterprises (LEYE), one of the nation’s leading independent restaurant groups. Lettuce owns, manages or licenses more than 90 establishments across seven states. How does that dynamic impact Wow Bao’s resources?

GEOFF ALEXANDER: Lettuce Entertain You is an umbrella company. They take care of things like accounting, HR and risk management. Managing partners operate each concept and really do run their concept. If I want to sign a lease tomorrow, I have to go to my partners and get approval. But if I want to go out and order self-ordering kiosks, I can do that. I’m responsible financially for my restaurants. I have to make good business decisions. It’s not like I have a parent company that’s worth millions of dollars and a blank check book. That’s absolutely not true; I am a four-unit restaurant trying to make ends meet, doing everything I can for risk and reward.

HT: You took over the Wow Bao concept as its president in 2009, and at that time Wow Bao had three locations. You’ve since added a fourth location, and dove heavily into multi-channel sales: festivals, delivery, pop-up restaurants, a food truck, etc. Can you talk about the decision to go multi-channel?

GA: It’s about building a brand and taking a food to people that they don’t know, and we’ve done a lot to educate guests on our product. We started doing festivals for brand recognition and that’s evolved into its own piece of the business. We just wrapped up Lollapolooza [an annual three-day music festival with attendance approaching 300,000 people] and had our best event of the three years we’ve done it.

For the delivery piece, I grew up in New York City and would always see bicycles delivering Chinese food all over the city. Our food is steamed and doesn’t have the longest shelf life if you’re trying to deliver several miles away. Bike delivery lets us be faster than car delivery. Finding parking alone would be difficult in Chicago.

As for the food truck, they weren’t allowed in Chicago when we started doing this but you could use a truck to sell pre-packaged food. At that time, we had a van we were using to deliver food to a commissary, but that van sat in our parking lot 23 hours a day. We decided to put a hot box on the van to sell bao that was made and packaged in the store. The food is kept to temperature and tastes very close to in-store. Doing this allows us to test-market areas of the city. We use #bunsontherun to tweet our van’s location to our followers.

HT: What are some of the biggest challenges you’ve encountered in exploring these sorts of multi-channel opportunities?

GA: You have to expect frustrations. With the food truck, for example, there was a period of figuring out where the right locations were, how much sales you’d need, and finding the right person to drive the van and represent your brand. You have to treat each of these channels as a business. Anyone can try anything. Those who succeed are the ones who put time and effort into it to make it work. The number one pitfall is, do you have the people you need to make it happen? You have to be dedicated to it, treat it for what it can potentially be, and have a vision. I have a very distinct vision of where I want Wow Bao to be one day.

HT: What is the vision for Wow Bao?

GA: We’re doing something that no one else is doing — a cuisine that hasn’t been tapped in to — which gives us the potential to have something very big and very unique. I see Wow Bao being global. Here’s how I’ll know Wow Bao made it big: when you go to a baseball game and a guy walks around with a steamer on his chest tossing Wow Bao to customers like a hot dog or bag of peanuts.

HT: You’re known among the partners at LEYE as a technology pioneer. What is your approach to tech, and how is it helping Wow Bao’s multi-channel sales?

GA: If you’re going to jump on tech in the early stages, you have to put up with headaches. If you’re willing to have headaches, you can help shape tech. If you wait for headaches to be washed out, you’ll always be behind. I embrace the headaches.

In Fall of 2008 we were all voting for president. I had waited online for 45 minutes and finally got into the room. Then they handed me a ballot and said I could wait another 20 minutes for a booth to fill out the ballot, or I could use the machine over there that was available. As I’m voting for president at the machine, I’m thinking, “We should have this at Wow Bao.”

We started researching kiosks and added one in May of 2009. I bought two because the company [Nextep Systems, (www.nextepsystems.com) ] explained that if I have one only, people will walk by it. If you have two and someone is using it, people will see that and use the second one.

On the day we add kiosks to the restaurant, we make it that anyone who orders off the kiosk eats for free. The catch is, if we find a glitch, we’ll stop the line and fix it. By the time the day is over, we’ve gone through every permutation of an order.

We spent about $25,000 between hardware, electrical, installation, and integration to the Micros POS (www.micros.com). In 10 months we hit ROI. We had an 89-cent per-person higher check average than at the register. Using the kiosks, guests could order and walk out with food in one minute and 20 seconds, versus two minutes at the register. It made us more efficient, faster and saved us money.

HT: After that success with self-service ordering, you started looking at things like online ordering and mobile coupons. What was that process like?

GA: On my second day working with Wow Bao, LEYE’s President and CEO Kevin Brown sent me an article about online ordering. At the time I thought, “It takes two minutes from the time you walk in until you get your food. Who’s going to do this? Online ordering is for full-service restaurants.” I tossed it in a file and forgot about it.

But when we decided to deliver food via bicycles, the last thing we wanted were phone lines tied up with ordering. So I went back to that file and we’ve since installed Snapfinger (www.snapfinger.com) for online ordering, which integrates to our Micros POS. Adding online ordering has also enabled us to ship our product nationwide. Snapfinger also developed the Wow Bao app for iPhone or Android, which lets guests place orders for pick-up or delivery.

For the mobile couponing piece, we had an opt-in program for sending coupons via text message, but with the company we were originally using, coupons could be reused for two weeks and could be forwarded to friends. I didn’t like the security of that, or that my database wasn’t true. We switched to Mocapay (www.mocapay.com) out of Denver for sending coupons. They have the capability to offer text couponing with a one-time use code. [The single-use perishable token is patented “Mocapay Code” by the vendor. Wow Bao customers can text “buns” to 466622 to opt in, and coupons are sent every two weeks.] Once you use it, it’s gone. And if you forward it to your friend and they use it first, you’re out of luck. If the customer has Mocapay’s app [which functions like a mobile wallet for storing and redeeming gift cards], the coupon comes in as a barcode. If they don’t have the app or for non-smart phones, the coupon comes in as a text message with a numerical code that expires after 120 minutes, but can be refreshed if not redeemed. Overnight my text messaging database quadrupled, now with close to 5,000 people.

So I go back to Mocapay and say, “I walk around with coupons in my pocket called Bao Bucks. They’re good for $5 and if I meet you on the street and we strike up conversation, I might say, ‘here’s $5, go try Wow Bao.’” But then I started never having the coupons with me. Mocapay created an app for my phone, where if you give me your cell phone number, I can text you mobile money with a specified value. It works the same way as our text message coupons. I thought this was pretty cool! Now if I meet people on the street, I can be innovative and send them money.

HT: You have a pretty interesting story around how Wow Bao has used social media. Can you share that?

GA: Sure — we were monitoring Twitter one day in August 2010 and a guy posts, “I’m going to Wow Bao for a ‘business’ dinner. Can any1 tell me if it’s going to suck as much as reviews suggest.” We saw the tweet because we monitor keywords, and reached out to him [via BaoMouth, the company’s twitter handle. ] We asked him where he’d heard this, and offered him mobile money to come in and try it before his business dinner, to make sure he’d like it. The next day the guy starts posting photos on Twitter and Instagram about how cool Wow Bao is and how he’s looking forward to trying it. An AP writer sees the exchange, reaches out to the guy and us, and the story goes viral; Tony Bosco and Wow Bao. USA Today, CBS News, Huffington Post, NBC and many others picked it up. The story was all about how we handled the customer interaction through social.

Fast forward to April the following year: this guy goes to the White Sox’ opening day at Cellular Field. He posts a picture of himself eating Wow Bao there. He could have had anything he wanted to eat. We turned this guy into a brand ambassador because of our use of social and mobile technology.

You have to have confidence to reach out when someone says, “I hear your restaurant sucks,” and put yourself out there. You have to be willing to say, “Hey, what’s your cell phone number? Lunch is on us. Come see how great we really are.” It’s about talking to customers and could-be customers.

HT: With all of these sales channels, and the amount of first-hand involvement you have, how are you keeping up?

GA: You have to get people on your team who speak your language, embrace your vision, and want to succeed. That’s what it’s all about. But that said, I will not stop working Lollapolloza. I will not stop being involved in social media. I absolutely will not stop searching for more technology to enhance us.